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Monday, July 29, 2013

PROCESS OF DECISION MAKING Presentation Transcript:
1.PROCESS OF DECISION MAKING

2. IDENTIFYING THE PROBLEM
1)The first stage in decision making process involves diagnosing the problem .
2) Diagnosing/Identifying the problem implies: a) Knowing the gap between the current state and the expected state. b) Identifying the reasons for the gap. c) Gaining a full understanding of the problem in relation to the organization’s objectives.
3) This stage consumes a lot of time, because adequate care should be taken in identifying the problem.
4) The manager of the organization must have an overall view of the situation in order to find out the problem.

3. ANALYSING THE PROBLEM
1) The second stage after recognizing the problem is to analyze the problem which involves two steps: a) Classifying the problem b) Gathering information
2) Classification plays a vital role in order to determine who should take the decision and who should be consulted in taking it.
3) Few guidelines to classify the problems: a) The nature of the decision b) The impact of the decision c) The futurity of the decision d) The periodicity of the decision e) The limiting or strategic factor

4.SEARCH OF ALTERNATIVES
1) The third stage is to search for available alternatives and analyze their consequences.
2) The management responsible in the decision making process should keep in mind the limiting factors like finance, trained staff etc which are critical to the decision involved.
3) The management must always keep in mind the overall objectives of the enterprise during the search of the strategic/limiting factors.

5.ANALYSIS AND EVALUATION OF ALTERNATIVES
1) After the alternatives have been discovered, the fourth stage is to analyze and compare their relative importance.
2) The analysis involves listing of the pros and cons of the alternatives.
3) The risk involved in the alternatives should be evaluated.
4) Both tangible and intangible factors should be taken into consideration. a) Tangible factors: profits, money, time etc. b) Intangible factors: public relations, reputation, employee morale etc.

6.SELECTION OF BEST ALTERNATIVE
1) The past experience and the knowledge of the decision maker helps in the selection of the best alternative. 2) The consequences of various alternatives can be weighed in the following terms: a) RISK: A manager must weigh the risks of each course of action against the expected gains. b) ECONOMY OF EFFORT: A manager should be able to mobilize the resources for the achievement of results with the minimum of efforts. c) SITUATION OR TIMING: The selection of the best alternative depends on the situation prevailing at that particular time. d) LIMITATION OF RESOURCES: The manager must keep in mind the limiting/strategic factors.

7.IMPLEMENTATION OF DECISION
1) The last and sixth stage is to implement the decision.
2) The management lays down the derivative plans.
3) During the implementation, the decision maker needs to take into account variables such as beliefs, attitudes, values etc. of the people of the organization.
4) The subordinates are encouraged and motivated to participate in the decision making process.
5) The decision maker must establish effective controls so that the major deviations can be observed, analyzed and prevented.